Businessweek Archives

A Monster Truck Boom

November 20, 1994

Economic Trends

A MONSTER TRUCK BOOM

Although auto sales are cruising nicely, the hottest movers in the motor-vehicle lineup, reports analyst Frank Prezelski of Ladenburg, Thalmann & Co., are the real heavyweights of the industry: heavy-duty trucks, whose prices run from $50,000 to $150,000. Producers of these 5-ton-plus rigs, which haul monster trailers on the interstates, are running flat-out. Sales in the U.S. and Canada should hit a record 220,000 units this year--up 56% from 1992.

Several factors lie behind the demand explosion. The most important, of course, are the booms in exports and in manufacturing generally, particularly in autos. The trend toward just-in-time manufacturing has also hyped demand for fast, efficient trucking service to deliver parts rapidly and reliably.

In the meantime, many truck operators entered the 1990s ill- equipped to handle the heightened demand for efficient service. Burned by deregulation and recessions in the early 1980s, truckers saddled with surplus capacity gave little thought to replacing an aging truck fleet.

Thus, the sales surge reflects normal replacement needs, plus demand for stronger, more reliable, and more efficient equipment. New emission standards and larger trailers have also catalyzed demand. But while order backlogs are running into 1996, truck makers haven't raised prices or boosted capacity much. "The industry," explains Prezelski, "can't believe the good times will last."GENE KORETZ